How it works, Prop 13, assessments, exemptions
San Diego County property tax rate: ~1.20% (varies by location but this is baseline).
Example: $1,000,000 home = ~$12,500/year property tax.
But here's the catch: That 1.20% applies to your "assessed value," NOT market value. This is where Prop 13 comes in.
California's Prop 13 freezes your property tax assessment at time of purchase. It only increases 2% per year, regardless of market appreciation.
If you BUY a home, assessment resets to market value: You lose the 30+ years of frozen assessments the previous owner had.
Example: Previous owner bought 1990 at $300K, lived there 30 years. Assessment frozen at ~$450K (with 2% annual increases). You buy for $1.2M in 2024. Assessment resets to $1.2M. Your tax jumps from $5,600/yr (what previous owner paid) to $15,000/yr (what you pay).
This is why people stay in California homes forever — moving resets your taxes.
Prop 19 allows you to transfer your old assessment basis to a new home, even if more expensive. This partially avoids the reassessment jump.
Example: You sell Bay Area home (assessment $400K, market $2M). Buy San Diego home ($1M). Prop 19 transfers $400K basis to new home. Assessment = $400K, tax = $5,000/yr (instead of $12,500/yr).
This is why Prop 19 is so valuable for California downsizers.
If you buy and stay 20+ years, Prop 13 saves you hundreds of thousands in taxes. Your assessment grows only 2%/year while market grows 3–5%/year.
If you buy and sell in 5–7 years, reassessment means you overpaid for the home (you absorbed tax-resetting risk).
Plan to stay. Don't buy with exit strategy in mind.